The Two-Way

9:16 am

Mon September 30, 2013

No Assembly Required: Ikea To Sell Solar Panels In U.K.

Workers assemble solar panels at the now-bankrupt Suntech in the eastern Chinese city of Wuxi. Overproduction in the country has helped lower the cost of solar panels.

Peter Parks AFP/Getty Images

Ikea Corp., the Swedish housewares giant, says it will begin selling solar panels to its customers in Britain as it aims to tap into a growing market for renewable energy fueled partly by the U.K.'s solar subsidies.

The retailer has already gone green to power its own stores, with the goal of using renewables to produce 100 percent of its energy needs by 2020. Ikea says it will begin offering the photovoltaic (PV) solar panel packages — which include installation — at all 17 of its British stores within the next 10 months.

"[Ikea's] offer of panels made by China's Hanergy Holding Group Ltd, a power producer and manufacturer of thin-film PV panels, involves a minimum spend of £5,700 [$9,200], for which customers get 18 panels, which should break even within roughly seven years.

" 'We know that our customers want to live more sustainably and we hope working with Hanergy to make solar panels affordable and easily available helps them do just that,' said Joanna Yarrow, Ikea's head of sustainability in the UK and Ireland."

The Wall Street Journalquotes Steve Howard, Ikea's sustainability chief, as saying the company aims to make the initiative into "a real business" even though the margins will be slim compared with other products sold by the retailer.

"In recent years, the company has aggressively pushed a portfolio of products intended to curb energy consumption, including LED bulbs, ultra efficient appliances and products that conserve water. Sustainability plays a massive role in IKEA's marketing efforts.

"Solar panels, however, are a pricey solution for customers, even though IKEA claims it can offer them cheaper than most competitors due to its scale and willingness to shoulder low margins."

Solar panels have come down in price in recent months because China, where the vast majority of the world's photovoltaic cells are produced, has suffered a glut due to overproduction.

Beijing is even offering tax rebates to manufacturers in an effort to prop up the struggling sector, according to the BBC.

The BBC says:

"Manufacturers will be refunded 50% of the value added tax from 1 October 2013 to 31 December 2015, the state-owned Xinhua news agency has reported.

"Chinese firms emerged as key players in the solar power sector in recent years.

"But weak demand and trade rows have resulted in overcapacity, leaving leading firms with huge debts.

"According to the Xinhua report, the country's top 10 solar panel makers have up to 100bn yuan ($16.3bn; £10bn) in debt.